Saturday, May 29, 2010

Why some Countries Grow While Others Do not?

Questions are being asked, why do other countries grow while others do not? What determine the rate of growth of a country? Why do countries with similar geographical conditions or with same natural resources differ in growth?

Inputs of growth are Land (Natural Resources, soil, Climate, Minerals, and Hydrocarbons), Labor ( Human Resources, Putting unemployed to work, and Education) and Capital ( Financial Resources, Domestic savings,and Foreign Capital).

There are two different growth models, i.e Input Driven Growth and Productivity-Driven Growth.

The input-driven growth depends on 1)extracting natural resources which eventually, this hits a maximum rate; 2)Putting unemployed to work, eventually, everyone is working and; 3)mobilizing people's savings, eventually, all savings are mobilized.

In productivity-driven growth, when inputs are fully used, further growth can come only from higher productivity. Productivity-driven growth = more output per unit input. Therefore, to grow fastest:

Max: Output/Input

Why is Africa not growing?

There are three types of theories used to explain reasons for Africa's undergrowth. These are geographical theories, legacy theories and institutional theories.

Geographical theories suggest that Africa is not growing because it has bad climate, presence of many kinds of disease, isolation from coast, and poor soil quality.

Legacy theories suggest that Africa is not growing as a result of recent colonial history and effects of tribalism. Institutional theories suggest that the African continent is not growing due to inefficient courts, corruption and authoritarian governments, plus lack of adequate schooling.

But,what made Botswana different? Not geographical because the country is landlocked and arid. The Country has one of World's highest AIDS rates. Not colonial history because British colonialists left 12 km of paved road and 22 University graduates. Institutions of private property are what made Botswana different from other countries of Africa.

In Botswana, a broad cross-section of the people have effective property rights: rule of law, sanctity of contract, and minimal state or private predation; Relatively efficient, business-friendly bureaucracy; and Conservative fiscal policy.

Acemoglu, Johnson and Robinson careful statistical research in 2000-2002 suggests that good institutions lead powerfully to economic growth, i.e. accounts for 3/4 of the gap between rich and poor countries. Controlling for institutional quality, Africa is not an outlier.

According to Professor David O.Beim of Columbia Business School, Botswana got where it is today as a result of pre-colonial history of power sharing, good governments of Seretse Khama and Quett Masire, Orthodox economic policies, and Diamond (40% of GDP).

Natural Resources

Diamonds did not help Sierra Leone. On average, there is a reverse correlation of natural resources to growth. Extraction does not build economy and this can be clearly explained when one looks at an example of Indonesia Vs. Japan, and of Saudi Arabia. While Indonesia is one of the World's largest extractors of iron, Japan does not extract anything of significance, but the later is the world's second largest economy while the former is a developing country.

This can also be explained from an example of Saudia Arabia. While the Country is the World's number one producer of crude oil, it is not among the leading economies of the World.

Foreign Aid

Raghuram Rajan, Chief Economist at the International Monetary Fund ( IMF) in 2003-2006 concluded that foreign aid does not correlate with growth, but rather it does correlate with corruption. According to Rajan, what matters is a good private sector protected by a good government.

Free Financial Markets

High-return, value-creating projects accelerate economic growth. Free financial markets shower capital on high-return projects and snatch it away value destroyers.


Source: The Manager( Pilot Edition October/December 2009)

Wednesday, May 26, 2010

NITAFURAHI PALE AMBAPO WATANZANIA TUTAANZA KUIPENDA NA KUIHESHIMU NCHI YETU ZAIDI YA FAMILIA ZETU.

LEADERS ARE DESIGNED NOT GROWING ORGANICALLY!

Across Africa we have a crisis; and its a crisis of leadership that prove a catastrophic to our daily well-being. Yet we have been led to believe without questioning that linear formal education should be/ and has been an answer to our woes.

Julius Kambarage Nyerere was the first President of Independent Tanganyika. He had a Master Degree from Edinburgh, Scotland. That was a degree in History. 45 years later our leadership lineup is the congregation of certification to the extent of even accepting fake credentials in the form of PhD's ( if the current allegation are true).

Yet what we are missing is the bunch of leaders whose brain are engaged with the whole mind development. Scientists have ascertained that a human brain consists of two sides of the coin. Left brain dealing with the development of what we already know, mathematics, physics, biology, history, English, accounts etc, and right brain that deals with the creativity part of the circle. Unfortunately formal schooling mutes the development of our right brain and thus humans ( even our leaders) fails to be creative, innovative, playful, and above all empathetic.

Listen to the words of our honorable member of Parliament to appreciate how shallow minded our leaders are!! its a pity that a leader tells journalists that what he has is 'vijisenti' compared to other leaders. These are the words from a highly learned lawyer telling the forth organ of the nation, 'The Media'. Again its ironic when a Region Commissioner of Dar Es Salaam shamelessly says that he can not evict people residing at Msimbazi valley amid torrential rain simply because this is the election year.

A solution to the poor moral behaviors of our leaders lays to the way we raise our kids. Mathematics, history, English is necessary and still essential but these are no longer enough if we're really serious in creating a bunch of good and effective leaders. Developing right side of our kids brain will implant empathy and creativity essential for the leaders to appreciate the well being of their electorates.

If we really want to see leaders using the right side of their brain, then President Kagame of Rwanda is one of them. Recently he grounded fleet of luxurious cars belonging to Government executives and donor funded institutions. He is the kind of a leader with empathetic gesture questioning the rationale of excessive expense pertaining big men in his country at the expense of his electorates.


The sooner the better.

Wednesday, May 19, 2010

WAYS TO BALANCE THE EQUATION

Why donors fear Kagame's war on graft

The Botswana Gazette

13.04.2005

http://www.gazette.bw/tbg_buhead2.htm by Andrew M.



Last week I was in Kigali , this time at the heels of a cabinet decision to impound all luxurious four wheel drive vehicles bought at government expense and driven by ministers, security and military chiefs, foreign experts and their local handlers. In a morning crackdown, all the big men and women of this republic woke up to find that police constables along the main roads were stopping and taking away their vehicles and leaving them to walk to office.

The international donor community, known all over Africa for its corrupt

and profligate life styles which they indulge in the name of fighting

poverty, was this time caught with their pants down. They claim to fight

poverty while riding in luxurious four-wheel drive vehicles, sitting in

opulently furnished offices, earning obscene salaries and living in

executive mansions. In a bold act of defiance, Rwanda impounded even those

vehicles belonging to donor projects. After cleaning his own government of

corruption, he has now taken on the profligacy of the international aid

industry and its experts are now scared.



In a discussion with President Paul Kagame, he told me that he had looked

at some of the "poverty reduction" projects and they smelt bad. "There are

projects here worth only $5m and when I looked at their expenses, I found

that $1m was going into buying these cars, each one of them at $70,000.

Another $1m goes to buy office furniture, more $1m for meetings and

entertainment, and yet another $1m as salaries for technical experts,

leaving only $1m for the actual expenditure on a poverty reducing activity.

Is this the way to fight poverty?" he asked as I shifted with glee in my

chair.



Already, the government is auctioning these vehicles and so far has gotten

over $3m from the sales. Mr Kagame has now issued a new directive, saying

government should not purchase cars for its officials with more than 2,500

cc. But there is more: the government has placed a ceiling on mobile

telephone expenses for all its ministers, military and security chiefs to

50,000 Rwanda Francs (Shs150, 000), and also ordered MTN Rwanda to cut off

their international roaming access.



The directive also stops the holding of workshops, seminars and conferences

on poverty reduction in posh hotels like the Intercontinental, Mille

Collins etc, insisting they should be in government owned buildings at no

cost. The order also requires all government ministries; departments and

agencies to move from privately owned buildings where they pay high rents

to government owned buildings.



I told Kagame that whereas some of the most highly skilled Africans are

going to Europe and North America to clean streets and toilets, our

development partners send us Œtechnical experts on these projects at

individual monthly salaries of between $10,000 and $20,000, a salary that

could pay 12 Africans of better training and experience and save this

continent from severe brain drain. In fact, most of these so-called experts

are a miserable, career-stranded lot in their own countries, but are dumped

in Africa and other poor countries through foreign aid protocols.



Donors never shy from lecturing our governments on fiscal frugality, yet

their aid driven projects are the most profligate. Of total project aid to

Uganda 's ministry of Health, 93 percent of it goes into technical

assistance (i.e. salaries and allowances for the experts) and overheads

(i.e. four wheel drive vehicles, opulent office furniture, computers,

stationary, tea and cakes).



Only a miserable 7 percent of this aid goes into purchase of drugs. Now you

understand why, in spite of a huge health budget, our people cannot find

drugs in hospitals. We in the media have been shouting ourselves hoarse

against government corruption. It is time to expose the worse forms of

profligacy, which forces our governments to pile up huge sums in debt.



In fact, of the total money from the Uganda government budget to the

ministry of Health, 98 percent reaches its intended beneficiaries, clearly

showing that in spite of its corrupt ways, the government of Uganda is a

better evil than donors. Of total project aid to Uganda , 68 percent goes

into overheads and technical assistance. Only 32 percent to its intended

beneficiaries.



A few weeks ago I presented the above facts to President Yoweri Museveni

and asked him to act. My heart bleeds to say he is so deeply discredited by

his inability to tackle corruption in his government, and his own

profligate public administration expenditure that he lacks moral authority

to take on donors.



The other reason is that his regime lives off this coalition of mutual

deceit with donors that both are fighting to eradicate poverty in Uganda .

Kagame, however, is able to act boldly because he occupies a moral high

ground in fighting corruption, has ensured fiscal frugality and also

because his government pursues strategies of survival - not necessarily

dependant on donor approval.



In Rwanda , ministers and other high ranking public officials resign and or

are fired by the week because of allegations of corruption. From the lowest

clerk in a government office to the most powerful minister or military or

security chief, no one is immune to jail when they steal; none close to the

president, none distant from him. You steal, you get jailed.



If there is some prima facie case that you stole, but there isn't not

enough evidence to convict you in a court of law, then you are asked to

resign or get fired. What a tough guy this Kagame man is!!

Love, Peace and Harmony!!!! "I want to believe that I am gold and diamond. In order to be refined I have to go through this period of fire. Tomorrow, I want to believe, Mzwakhe will become the source of inspiration to those who have despaired, those who were discouraged, those who are in extreme physical problems and pangs" - Mzwakhe Mbuli 'People's Poet', 2005

Tuesday, May 18, 2010



Tujadili. Shule ya enzi zetu, au hizi za academy. mfumo upi bora?

Saturday, May 15, 2010

Sneaking is dangerous

Please read this carefully,
Lesson to All Women/Men
A couple was invited to a masked costume Halloween party. The wife got a terrible headache and told her husband to go to the party alone. He,being a devoted husband, protested, but she argued and said she was going to take some aspirin and go to bed, and there was no need for his good time to be spoiled by not going. So he took his Batman costume (mask) and away he went.
The wife, after sleeping soundly for about an hour, awakened without pain, and, as it was still early, decided to go to the party. In as much as her husband did not know what her costume was, she thought she would have some fun by watching her husband to see how he acted when she was not with him. She put on a Goldilocks costume (mask). So she joined the party and soon spotted her husband enjoying himself on the dance floor, dancing with every nice woman he cuddled and occasionally giving a little kiss here and there.
His wife went up to him and being a rather seductive woman herself, his husband left his new partner devoted his time to her. She let him go as far as he wished, naturally, since he was her husband. After some more drinking he finally whispered a little proposition in her ear and she agreed, so off they went to one of the cars and had quick sex in the back seat.

She slipped away before unmasking herself or her husband and went home and put her costume (mask) away and got into bed, wondering what kind of explanation he would make up for his outrageous behavior. She was sitting up reading when he came in, so she asked what kind of time he had.

"Oh, the same old thing. You know I never have a good time when you're not there."Then she asked, "Did you dance much?"
He replied, "I tell you, I never even danced one dance. When I got there, I met Pete, Bill Brown and some other guys, so we went into the spare room and played darts all evening."

"You must have looked really silly wearing that Batman costume playing darts all night!" She said with unashamed sarcasm.
To which the husband replied, "Actually, I gave my Batman costume to your Dad who seemed to have had a jolly good time on the dance floor. I am told that he was seen by Frank taking a prostitute in a Goldilocks outfit out for a few minutes. Don't ask me what they did; you know your dad still wants to behave like a kid."

Moral of the story: Don't try to sneak up on your husband/wife

take care n enjoy ur wk-en

Blogger Buzz: Blogger integrates with Amazon Associates

Blogger Buzz: Blogger integrates with Amazon Associates

Ailing Library: A source of human resource failure!

Library is the source of information: that one researcher/author transfers his/her knowledge to the community. Western world thrives on deliverance of knowledge from one person to the other.

A century ago, not a very long time, our natural way of transferring knowledge was totally disrupted by the coming of a white man.A craftsman would let a young man to learn his trade through apprenticeship and hence therefore the learner eventually by using the knowledge plus forces of environment could manage to sharpen the item into the next better level. To date though witch doctors are ubiquitous they do not have an official way of transferring their knowledge to the next generation. Contrary the western world spend enormous amount of capital on researches and development ( R& D) and thereafter results of their researches are published and displayed in libraries and universities. I may argue that the first world still transfers knowledge to the next generation while our way of knowledge is sadly muted.

Dar Es Salaam has one existing Library located at the Central Business District constructed several decades ago when the City had a population of less than 500,000 residents. Now with the population close to 5 million the ill-equipped library looks like a joke stalking old books. As residents move as far as 30km from CBD we expect library services to follow the ever moving population but this is not happening leaving only market force to demand consumption patterns of Dar Es Salaam dwellers. We are enclosed with noisy bars, convenient shops,hotels, restaurants etc that facilitate consumption of foreign stuff at the expense of our innovation and creativity.

Prof. Ali Mazrui once wrote that capitalism implanted into our being consumption culture but intentionally did not activate technological know how. We moved from communal way of life into capitalism embedded with modernity, excessive consumption of material goods without learning on how to manufacture them. Yet existence of libraries ensures that knowledge is shared among humanities not only of these generation but many many more from today. After all if Edison ignored to document his findings that led to the discovery of bulb we could not be enjoying electricity as we consume today. One discovery leads to another, and one way the next generation accrues the knowledge of the last scientist is by visiting local, national and university libraries; the idea we're desperately missing.


The reason why we fail to develop libraries is that our leaders' mindset is engraved in the idea that development will be determined by drilling natural resources to the exception of human resources. Now and then leaders trot around the world looking for investors to harness gold, uranium, oil, tanzanite, etc with no clue that the real development will be gained by developing human resources.Canada( a leading nation in mineral extraction) has a higher valued human resource compared to none in southern Africa that enabled her to exploit our fragile economies by extracting minerals massively.Take Switzerland as a case in point. The country is landlocked, with no natural resources but yet harnessing talents of her own men and women guarantees a place among to the club of the mighty.Switzerland is good in producing very tiny but highly valued items that needs greater input of human brain as compared to muscle power.